Cyber Monday spending jumps 33%

By Zak StamborManaging Editor

Online retailers report big gains for the holiday weekend, thanks in part to promotions.

Online sales yesterday increased 33% compared with a year ago, according to IBM Corp.’s SmarterCommerce unit that tracks data from 500 retailers. Last year consumers spent a record-setting $1.03 billion online on the Monday following Thanksgiving weekend, which is also known as Cyber Monday, according to web measurement firm comScore Inc., which has not yet reported sales from yesterday.

"Cyber Monday was once again the big winner for the Thanksgiving holiday shopping season, with a record number of consumers focused on finding the best online deals," says John Squire, chief strategy officer, IBM Smarter Commerce, the IBM unit that provides digital technology and services, including analytics data from Coremetrics, which IBM acquired last year. "Retailers that adopted a smarter approach to commerce, one that allowed them to swiftly adjust to the shifting shopping habits of their customers, whether in-store, online or via their mobile device, were able to fully benefit from this day and the entire holiday weekend.”

Shoppers’ buying habits did change this year compared with a year ago, according to Coremetrics. For instance, 10.8% of shoppers used a mobile device to visit a retailer’s site yesterday, up from 3.9% a year ago. That traffic corresponded to a growth in mobile sales, which increased to 6.6% of online purchases from 2.3% in 2010.

Sales were strong out of the gate, starting on Thanksgiving day. Over the four-day stretch leading up to Cyber Monday, online shoppers spent $2.33 billion, a 20.1% jump from $1.94 billion a year ago, according to comScore.

In addition to retailers’ promotions, sales were spurred by consumers this month feeling more upbeat about the economic conditions facing the country, according to the Conference Board Consumer Research Center’s index, which is conducted by Nielsen. The index shows that consumer confidence increased 36.9% in November from October, the biggest surge since April 2003. “Consumers appear to be entering the holiday season in better spirits,” says Lynn Franco, director of the Conference Board Consumer Research Center.

Those good spirits helped retailers like Amazon.com Inc. achieve record-breaking sales. Amazon, No. 1 in the Top 500 Guide, says that it sold more of its Kindle e-readers on the day after Thanksgiving, also known as Black Friday, than it ever has before. The world’s largest online retailer says that it sold nearly four times as many Kindle devices as it did a year ago. Those numbers are bolstered by the fact that Amazon has extended its Kindle family, introducing devices such as the Kindle Fire tablet computer. But, even so, Amazon says sales of the e-readers are rapidly growing, says Dave Limp, vice president, Amazon Kindle. “We're seeing a lot of customers buying multiple Kindles—one for themselves and others as gifts—we expect this trend to continue."

Similarly, online apparel retailer Karmaloop.com had its biggest day in company history on Friday, ringing up $1.5 million in sales, says Kevin Fowler, the retailer’s e-commerce director. Compared to the day after Thanksgiving in 2010, the retailer’s revenue increased 117%, thanks, in part, to its traffic being up 39%, its conversion rate up 35% and its pay-per-click revenue up 200%. But Friday's record didn't last long: On Monday, Karmaloop's sales hit $1.8 million. Overall, sales from last Tuesday through yesterday were up 104% over the same period last year, the retailer says.

But it wasn’t just Black Friday that bolstered Karmaloop’s holiday sales. Like many other retailers, Karmaloop saw a huge uptick in the number of shoppers who went online to shop on Thanksgiving Day, says Fowler. That traffic spike helped the retailer achieve a 167% lift in revenue over last year’s Thanksgiving.

Web-only retailer Power Equipment Direct Inc., which had not previously made a big marketing push around Thanksgiving—“Who wants a generator for Christmas, we thought,” says CEO Jon Hoch—stepped up its e-mail and social marketing campaigns and saw big results. Sales on Friday were up 141% over last year, Saturday 155%, Sunday 150% and Monday 87.5%. The best part, he says, is that the e-mail and Facebook promotions were set up Wednesday and his employees were able to take a four-day break while the web site rang up sales.

ChannelAdvisor Corp. and Mercent, two firms that provide marketing services to online retailers, reported strong sales gains on Monday. ChannelAdvisor says its clients’ same-seller sales were up 24.6% on Monday versus the same day last year, with Amazon sellers registering 52.6% growth. Sales on eBay were up 10.4%, from paid search ahead 38.6% and from comparison shopping engines 4.5%. Mercent says same-seller sales were up 29% year over year on Monday, with client sales on Amazon growing 35%.

The strong start to the holiday season is why research firm eMarketer Inc. expects holiday e-commerce sales to rise nearly 17% this year to $46.7 billion in 2011, up from $39.9 billion a year ago.